Contract analysis

I. Executive Summary This memorandum evaluates whether Veridian Biosciences, Inc. ("Veridian" or the "Company") complied with its notification obligations under Section 5.1(b) of the Stock Purchase Agreement dated June 10, 2024 (the "SPA") between Penterra Pharmaceuticals Corp. ("Penterra" or "PPC") and the stockholders of Veridian with respect to the data generated by the Marlowe Asset Management-2 Phase II clinical

II. Background A. The Transaction Penterra Pharmaceuticals Corp. ("Penterra" or "PPC"), a Delaware corporation publicly traded on the Nasdaq Global Select Market under the ticker symbol "PPCA," entered into the Stock Purchase Agreement dated June 10, 2024 (the "SPA") to acquire one hundred percent (100%) of the outstanding capital stock of Veridian Biosciences, Inc. ("Veridian" or the "Company") for aggregate conside

III. Relevant SPA Provisions A. Section 5.1(b) — Notification Covenants

Section 5.1(b) of the SPA establishes the affirmative notification obligations of Veridian and the Sellers during the interim period between signing and the earlier of the Closing or the termination of the SPA. The operative text of Section 5.1(b) provides as follows: "From the date of this Agreement until the earlier of the Closing or the termination of this Agreement in accordance with Article VIII, the Company sha

Section 5.1(b) further provides: "The delivery of any notification pursuant to this Section 5.1(b) shall not (A) be deemed to cure any breach of any representation, warranty, covenant, or obligation under this Agreement, (B) limit or otherwise affect the rights or remedies available to Buyer under this Agreement, including Buyer's right to terminate this Agreement pursuant to Article VIII, or (C) be deemed to satisfy

Section 5.1(a) — Ordinary Course Covenants. Section 5.1(a) requires Veridian to operate in the ordinary course of business consistent with past practice during the interim period between signing and closing, and to use commercially reasonable efforts to preserve intact the Company's business organization, relationships, and assets. While the notification obligations of Section 5.1(b) are analytically distinct from th

Section 7.2(a) — Representations and Warranties Closing Condition. Section 7.2(a) conditions Penterra's obligation to close on the accuracy of the Sellers' representations and warranties as of the Closing Date (with the accuracy of the representations and warranties qualified by a Material Adverse Effect standard, except for certain fundamental representations that must be true and correct in all respects). If the Ma

Section 7.2(b) — No Material Adverse Effect Closing Condition. Section 7.2(b) conditions Penterra's obligation to close on the absence of any Material Adverse Effect since the date of the SPA. If the Marlowe Asset Management-2 interim analysis results constitute a Material Adverse Effect under the SPA's definition, this closing condition would not be satisfied.

Section 1.1 — Definition of "Material Adverse Effect." The SPA defines "Material Adverse Effect" as: "any event, change, development, occurrence, condition, or effect that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, results of operations, financial condition, or assets of the Company, taken as a whole, or (b) the ability of the Sell

Section 8.1(d) — Buyer's Termination Right. Section 8.1(d) provides that Penterra may terminate the SPA if any of Penterra's closing conditions set forth in Section 7.2 have not been satisfied or are incapable of being satisfied on or prior to the Outside Date of December 10, 2024, provided that such failure is not the result of a breach by Penterra of any of its obligations under the SPA. This termination right may

IV. Analysis of Timeliness of Notification A. When Did Veridian Learn of the DMC Findings? The threshold question in evaluating the timeliness of Veridian's notification is when Veridian's management first became aware of the DMC's interim analysis findings and recommendation. The "promptly" standard runs from the date of the obligor's actual knowledge of the triggering event, not from the date of the event itself, t

V. Analysis of Completeness of Notification A. Content of Veridian's August 16, 2024 Notification As noted above, Veridian's notification was delivered by email from Rachel Stein-Goldberg (General Counsel, Veridian) to Thomas F. Holbrook (General Counsel, Penterra) on August 16, 2024, with a copy to Natalie Reiner. A full copy of the email is attached hereto as Appendix C. A separate, parallel communication from Rebe

Section 5.1(b)(vi): Material Clinical Trial Developments. Section 5.1(b)(vi) requires notification of "any material development relating to any pending clinical trial of the Company, including any data monitoring committee recommendation, adverse event report, or regulatory communication." The use of the word "including" indicates that DMC recommendations are a non-exhaustive example of the types of material clinical

Section 5.1(b)(i): Events Having or Reasonably Expected to Have a Material Adverse Effect. Section 5.1(b)(i) requires notification of "any event, circumstance, development, or occurrence arising after the date of this Agreement that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect." The Marlowe Asset Management-2 interim analysis results — including the elev

Section 5.1(b)(ii): Events Causing Representations to Be Untrue. Section 5.1(b)(ii) requires notification of any event that "would reasonably be expected to cause any representation or warranty of the Sellers set forth in Article III to be untrue or inaccurate in any material respect as of the Closing Date." The Sellers' representations in Article III include representations regarding the status and safety profile of

VI. Implications for Penterra's Rights Under the SPA A. Effect on Closing Conditions As set forth in the savings clause of Section 5.1(b), the delivery of a notification does not cure any breach of any representation, warranty, covenant, or obligation under the SPA, does not limit or affect Penterra's rights or remedies, and does not satisfy any of the closing conditions in Section 7.2. This means that the inadequacy

VII. Comparison to Industry Practice and Contractual Standards It is useful to contextualize Veridian's notification against the prevailing standards of practice in comparable biopharmaceutical M&A transactions involving clinical-stage targets with active clinical trials during the interim period between signing and closing. In transactions of this type, the interim period is recognized as a period of heightened info

VIII. Recommendations Based on the foregoing analysis, we recommend the following actions: A. Immediate Actions

1. Formal Document Request. Calderwood & Harkness should send a formal written communication to Zalcourt Archer & Cole LLP, attention Rebecca Whitmore, requesting full and complete copies of the following materials: (a) The Marlowe Asset Management-2 DMC interim analysis report generated in connection with the August 14, 2024 DMC meeting, including all appendices and exhibits thereto; (b) The DMC meeting minutes from

2. Documentation and Preservation. Penterra should carefully document and preserve the complete timeline and content of all notifications received from Veridian, including the August 16, 2024 email from Rachel Stein-Goldberg, the August 16, 2024 communication from Rebecca Whitmore, and all subsequent communications. This record should include date- and time-stamped copies of all emails and attachments, a narrative su

3. Coordination with Broadleaf Scientific Consulting. Penterra should continue to coordinate with Broadleaf Scientific Consulting LLC (Dr. Raymond Kapoor, Managing Director) to independently assess the DMC data as it becomes available, including any supplemental data produced by Veridian in response to the formal request described above. Broadleaf's assessment will be critical to Penterra's evaluation of the Material

1. Real-Time Compliance Tracking. Penterra should continue to track Veridian's compliance with all Section 5.1(b) notification obligations on a real-ti